Creation of an appropriate structure is indispensable for any organisation. Organisation structure represents the hierarchical arrangement of various positions in the enterprise. It helps in allocating authority and responsibility formally. It also lays down the pattern of communication and coordination in the enterprise. Thus, the need for clear-cut authority/responsibility relationships has led to three different forms of administrative organisation as follows :
1) Line organisation/authority
2) Line and staff organisation/authority, and
3) Functional organisation/authority.
Let us learn them in detail.
Line Organisation
It represents a direct vertical relationship through which activity flows. It is also known as scalar or military organisation. The line of authority flows from top to bottom throughout the organisation. The quantum of authority is highest at the top and reduces at each successive level down the hierarchy. Every person in the organisation is in the direct chain of command as shown below. The line of authority consists of an uninterrupted series of authority steps and forms a hierarchical arrangement. The line of authority not only becomes the avenue of co mm an d to operating personnel , but also provides the channel of communication, coordination and accountability in the enterprise.
| Board of Directors | ||||
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| Managing Director | ||||
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| Divisional Manager (Textiles) | Divisional Manager (Chemicals) | |||
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| Assistant Divisional Manager (marketing) | Assistant Divisional Manager (production) | |||
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| Foreman | Foreman | Foreman | ||
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| (Workers) | ||||
Merits of line organisation:Following are the merits of line organisation:
i) It is very simple to establish and can be easily understood by the employees.
ii) There is a clear-cut identification of authority and responsibility relationship.
iii) It ensures better discipline in the enterprise because every individual knows to whom he is responsible.
iv) It facilitates prompt decision making because there is definite authority at every level. An executive cannot shift his decision-making to others nor can the blame be shifted.
v) It facilitates unity of command and thus conforms to the scalar principle of organisation.
Demerits of line organisation :Following are the demerits of line organisation:
i) There is concentration of authority at the top. If the top level executives are not capable persons, the enterprise will not be successful.
ii) With growth, the line organisation makes the top executive overloaded with work.
iii) There is practically no communication from bottom upward because of concentration of authority at the higher levels. If superiors take wrong decision, it would be carried out without anybody having the courage to point out its deficiencies.
iv) Line organisation is not suitable in a big organisation because there is lack of specialisation. Many jobs create problems of their own which may not be within the competence of the superior and require handling by specialists.
Despite these drawbacks, the line organisation is very popular. Particularly in small organisations where there are fewer levels of authority and a small number of people. A modification of this structure is line and staff organisation under which specialists are attached to line executives to provide them specialised assistance on matters of great importance to the organisation.
Line and Staff Organisation
In line and staff organisation, line authority moves down in the same manner as
in the line organisation, but in addition, specialists (known as ‘staff’) are attached
to line managers to advise them on important matters. Those specialists stand
ready to advise and assist line men as and when required, which enable the line
officials to carry out their activities better. The staff officers do not have any
power of command in the organisation as they are employed only to provide
advice to the line officers. Staff means a supporting function intended to help
the line managers. In most organisations, the use of staff can be traced to the
need for helping handling details, gathering data for decisions and offering advice
on specific managerial problems. Staff investigates, supplies information and
makes recommendations to managers who take decisions. Line and staff structure
is shown below.
| Managing Director | ||||||||||||
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| Public | _______ | _______ | _______ | | | _______ | _______ | _______ | Secretary | ||||
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| Production | Marketing | Finance | ||||||||||
| Chief | -------------> | | | <-------------- | Production | | | <-------------- | Chief | | | <-------------- | Chief | ||
| | | | | | | ||||||||||
| | | | | | | | | | | | | | | | ||||
| Assistant | Assistant | Sale | Advertising | Chief | Cost |
Merits of line and staff organisation: The line and staff organisation has all the benefits of line organisations. In addition, it has the following advantages.
i) Line managers get the benefit of specialised knowledge of staff specialists.
ii) Many problems that are ignored or poorly handled in line organisation can be properly resolved in the line and staff organisation with the help of staff specialists.
iii) Staff specialists relieve the line managers from the botheration of concentrating on the specialised functions like budgeting selection and training, public relations, etc.
iv) Staff specialists help the line executives in taking better decisions by providing them with adequate information of the right type at the right moment and render expert advice.
v) Line and staff organisation is more flexible as compared to the line organisation. General staff can be employed to help line managers at the various levels.
Demerits of line and staff organisation: The biggest drawback from which this form of organisation suffers is the conflict between line and staff. The major source of line owned staff conflict is the difference in their viewpoints and perception. Conflict arises when any of them fails to appreciate the viewpoint of the other. When a conflict between line and staff arises both the parties try to explain the causes of conflict in terms of behaviour of the others. The important causes of line and staff conflict as reported by line men are as follows:
i) Staff officers encroach upon the line authority. They interfere in the work of line managers and try to tell them how to do their work.
ii) Staff specialists may be professionals and may not be well acquainted with the practical problems of the enterprise.
iii) Since staff men are not directly accountable for any result, they are generally overzealous and recommend a course of action which is not practical.
iv) Staff men generally fail to view the whole organisation objectively as they are specialists in particular areas.
v) Staff men have the tendency to take credit for the decisions which prove successful and lay the blame on line men in case the decisions do not prove successful.
The important causes of line and staff conflict as reported by staff men are discussed below:
i) Line managers generally do not make a proper use of the services of the specialists.
ii) Sometimes, staff advice is sought only as a last resort as line executives feel that asking for the advice is admitting defeat.
iii) The staff specialists should try to appreciate the difficulties in implementing new ideas. They should not consider it as a prestige issue if sometimes their advice is not followed.
iv) Line and staff people should try to understand the orientation of each other. They should try to achieve cooperation for the achievement of enterprise objectives.
Some people argue that the distinction between line and staff is an obsolete concept and should be done away with. They argue that it is meaningless to segregate organisation activities on the basis of their contribution to the achievement of goals. Moreover in recent years, the horizontal and diagonal relationships and work flows are gaining greater importance than the vertical relationships represented by the line authority.
Functional Organisation
Functional authority occupies a mid-way position between line and staff authority. It is a means of putting the specialists in top positions throughout the enterprise. It confers upon the holder a limited power of command over the people of other departments concerning their function. Functional authority remains confined to functional guidance of different departments. It helps in maintaining ability and uniformity of the performance of functional areas throughout the organisation.
Under functional organisations various activities of the enterprise are classified according to certain functions like production, marketing, finance, personnel, etc. and are put under the charge of functional specialists. A functional head directs the subordinates in his particular areas. That means the subordinates receive instructions not from one superior but from several functional specialists. In other words, the subordinates are accountable to different functional specialists for the performance of different functions.
It was F.W. Taylor who evolved functional organisation for planning and controlling manufacturing operations on the basis of specialisation. But, in practice, functionalisation is restricted to the top levels of the organisation structure and is not carried down to the lowest level in the organisation as recommended by Taylor.
Merits of functional organisation: The merits of functional organisation have been discussed below :
i) Specialisation:Functional organisation helps in achieving the benefits of specialisation of work. Every functional incharge is an expert in his area and can help the subordinate to perform better in his area.
ii) Executive development: A functional manager is required to have expertise in one function only. This makes it easy to develop executive.
iii) Reduction of work-load:Functional organisation reduces the burden on the top executives. There is point supervision in the organisation. Every functional incharge looks after his functional area only.
iv) Scope for expansion:Functional organisation offers a greater scope for expansion as compared to line organisation. It does not face the problem of limited capabilities of a few line managers.
v) Better control: The expert knowledge of the functional manager also facilitates better control and supervision in the organisation.
Demerits of functional organisation : Functional organisation suffers from the following drawbacks:
i) Double command:Functional organisation violates the principles of unity of command since a person is accountable to a number of bosses.
ii) Complexity: The operation of functional organisation is too complicated to be easily understood by the workers. Workers are supervised by a number of bosses. This creates confusion in the organisation.
iii) Problems of succession:Functional organisation develops specialists rather than generalists. This may create problem in succession of top executive positions.
iv) Limited perspective: A functional manager tends to create boundaries around himself and thinks only in terms of his own departments rather than the whole enterprise. This results in loss of overall perspective in dealing with business problems.
v) Delay in decision making: There is generally lack of coordination among the functional executives and delay in decision making when a decision problem requires the involvement of more than one specialist.
